How Much Credit Score is Needed for a Personal Loan Eligibility in India?

A minimum CIBIL score of 700 or above is considered good and required to qualify for a Personal Loan from leading lenders. It helps you secure favourable terms and attractive interest rates.

Your credit score is one of the most important factors considered when you apply for a loan. This is because it helps lenders calculate the risk involved in lending to you. In this blog post, we will discuss the Personal Loan eligibility criteria along with the credit score requirements. This will help you get the best possible terms when applying for a Personal Loan.

What is the Ideal Credit Score Required for a Personal Loan?

Generally, a credit score of 750 or above is considered an excellent credit score for availing of a loan. Borrowers with excellent credit scores typically get approved for higher loans quickly, often with the best loan terms. This can include competitive interest rates, longer loan tenures, and larger loan amounts.

A Personal Loan eligibility check often classifies credit scores into four categories:

• Excellent (750-900): If you have a credit score between 750 and 900, you can get approved for Personal Loans easily and at the best interest rates. 
• Good (700-749): If your credit score is 700-750, the loan will often be granted at an affordable interest rate. 
• Fair (650-699): Approval will be difficult, however, not impossible, if your credit score is less than 700. Lenders may offer secured loans with stricter terms and conditions. 
• Poor (Below 650): Lenders consider credit scores below 650 to be extremely risky, making approval nearly impossible.

Also Read:  How to Increase CIBIL Score From 600 to 750

How to Check Personal Loan Eligibility?

To check loan eligibility, lenders consider these key factors:

• Credit History: Shows your repayment history, existing debts and current liabilities
• Monthly Income: Ensures you have the minimum salary for the maximum loan amount you want to apply for. It also shows your repayment capacity.
• Debt-to-income Ratio: Helps lenders check if your existing financial obligations affect your ability to repay new loans.
• Employment History: Lenders assess salaried employees, self-employed, and business applicants differently based on income stability.
• Other Loans and Liabilities: Includes home loans, car loans or other active loans.

Online tools like the Personal Loan eligibility checker or Personal Loan eligibility calculator allow you to calculate Personal Loan eligibility instantly. It uses your income, existing debts, and loan terms to provide accurate calculations.

Personal Loan Eligibility Criteria

The Personal Loan eligibility criteria are similar across most banks and NBFCs. However, there may be minor differences due to unique lenders' policies.

Here are the eligibility requirements at Poonawalla Fincorp for an instant Personal Loan approval:

Can You Get a Personal Loan with a Low Credit Score?

Yes, however, eligible applicants might have to meet additional requirements. Some lenders would offer loans to applicants with lower scores if they can prove their financial stability and steady sources of income. However, these loans will have:

• Higher interest rates
• Smaller loan amount
• Shorter loan period
• Requirement of a co-applicant or a guarantor

For salaried individuals, having a steady job and a paycheck helps to build trust with lenders. Self-employed individuals can make their case stronger by submitting proof of continuous business income, tax filings, and bank statements.

To Conclude

When you apply for a Personal Loan, your credit score is one of the most critical factors that a lender considers. A credit score of 750 and above is considered excellent and increases your chances of getting approved with favourable terms.  

However, people with lower scores can still qualify, but they may have to pay higher interest rates or meet stricter eligibility requirements. Keeping a strong repayment history and minimal credit utilisation will help you improve your creditworthiness.

Poonawalla Fincorp offers hassle-free Personal Loans of up to ₹50 Lakh without any collateral. If you're looking to obtain funds quickly to meet your financial needs , apply for our Personal Loan with an excellent credit score and enjoy the most favourable terms!

FAQs

What credit score is required for loan approval in general? 

A score of 750 and above is ideal for easy approval and favourable terms. However, some lenders will consider applicants with lower scores, provided they have a stable income and a proven ability to repay.

Can I get approved for a loan if my credit score is below 650? 

It is challenging to get approval for unsecured or collateral-free loans. Some lenders will still offer loans, but with stricter terms, higher interest rates, or collateral requirements.

What credit score is required for a loan of ₹10 lakh for personal emergency expenses? 

A score of at least 700 is advisable, while a score of 750 or more can significantly expedite loan disbursal and ensure quicker approvals and lower interest rates.

Does high income compensate for a low credit score while applying for a Personal Loan? 

High income will definitely improve your chances; however, lenders still view credit score as a key indicator of repayment behaviour.

How long does it take to improve a credit score? 

It will take several months of disciplined financial behaviour, such as timely repayments and reduced credit utilisation, to see noticeable improvement.